The automotive market is currently suffering from a semiconductor shortage, causing numerous automotive OEMs to delay production on vehicles.
This shortage may last the entire year and is adding more fuel to the movement to increase domestic U.S. chip manufacturing to prevent these issues from happening or at least reducing their impact. To increase capacity in manufacturing, Globalfoundries (GF) is investing $1.4 billion to expand output at its three factories in the U.S., Singapore and Germany.
In a report from Reuters, GF said it is expanding to help with the global shortage of semiconductors to boost the availability of chips.
The root cause of the automotive chip shortage is COVID-19, which caused automotive OEMs to reduce demand for vehicle parts. By the time demand returned, other markets were already recovering, leading to no available capacity for automotive semiconductors.
GF CEO Thomas Caulfield told Reuters the chip industry that was projected to grow 5% over a five-year period is now expected to grow twice that rate.
The $1.4 billion investment will be divided even among GF’s Dresden, Germany, Malta, New York, and Singapore facilities, with a ramp up in output expected through 2022 to produce chips from 12 to 90 nm.
GF said about a third of the investment will come from clients seeking to lock in supply over several years with a 20% rise in production expected next year, followed by a 13% increase this year. GF may build a new facility at its Malta, New York, plant after purchasing 66 acres near its Fab 8 facility last year. This new plant may be relying on the National Defense Authorization Act (NDAA), which includes the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America provision that will provide incentives and possibly funding to expand domestic U.S. manufacturing.
President Joe Biden has been active in support of bringing manufacturing back to the U.S., signing an executive order for a 100-day review of supply chains to help shore up the supply of chips to help ease the automotive shortage.
The Biden Administration, along with U.S.-based chipmakers and organizations, are calling for renewed interest in U.S. domestic chip manufacturing to prevent future problems such as the current automotive chip shortage and to shore up capacity for future growth, which is now being considered a matter of national security.
Last year, the world’s largest foundry, Taiwan Semiconductor Manufacturing Corp. (TSMC), said it will build a new fab that will feature 5 nm technology for semiconductor wafer fabrication, producing 20,000 semiconductor wafers per month and creating more than 1,600 jobs directly and thousands of indirect jobs in the ecosystem.